BHP
Billiton has pushed a partial pause on its ambitions in potash by deciding to trim $US200 million ($213 million) or so this year from spending on the two shafts it is digging at its Jansen project in distant Saskatchewan.

As spruikers for its slightly troubled incumbent in fertiliser, Potash Corporation, fuel rather fanciful speculation about BHP’s recovered interest in Canada’s protected species, BHP has confirmed Jansen spending will fall short of the $US200 million ($213 million) previously planned for this year.

BHP’s third-quarter production report also notes that Jansen’s complicated access shafts and supporting infrastructure would not be completed on a schedule confirmed last year, which would have had production starting to ramp up sometime after 2018.

BHP insists the immediate and shorter-term dynamics of the strife-torn potash market have not shaped the Jansen strategy.

But it cannot have helped that the price has been battered by a nasty spat between the Eastern bloc potash cartel that represents the interests of Russia’s Uralkali and Belaruskali, nor that tension over the future of Ukraine has again illustrated Russia’s habitual deployment of commercial muscle in the service of its revanchist national interest.

For all that, BHP said the cost of pre-commitment construction at Jansen remained set in ice at $US2.6 billion ($2.7 billion) and, rather paradoxically, the supporting rhetoric on Jansen indicates the company is rather more firm on its intentions in potash that it was when the year started.

“On the basis of our current projections for market demand, the Jansen mine could ramp up to its theoretical design capacity of approximately 10 Mtpa (million tonnes a year) in the decade beyond 2020," the production report said.

“With our investment premised on the attractive longer-term market fundamentals for potash, we will continue to modulate the pace of development as we seek to time our entrance to meet market demand, thereby maximising shareholder returns."

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‘We continue to actively study the next phase of simplification’

Outside the potash dilemma, BHP’s March production numbers present an iron ore business that dealt rather more successfully with the Pilbara’s wet season than did the company’s competitor to the south,
Rio Tinto
.

Cyclones and rain left Rio delivering its worst iron ore numbers in a year, but BHP was able to defend the momentum generated by the introduction of the huge Jimblebar mine to its fleet. So while Rio’s output fell back by 6 per cent, BHP’s moved ahead by 1 per cent on the December quarter, which represents a 23 per cent gain year on year.

As a result, BHP has added 10 million tonnes to its fiscal 2014 iron ore production guidance, which now sits at 217 million tonnes. Just as critically, the company also effectively affirmed petroleum guidance despite interruptions through December to onshore production after problems with pipelines in Texas. I say effectively only because the actual number has slipped back from 250 million barrels of oil equivalent to 245 million, but that pretty much only reflects the effect of the sale of the Liverpool Bay project in the UK.

BHP reported recent appraisal work at its Escondida copper mine in Chile had added about 20 per cent to the giant’s inferred resource. Because of the certainties of copper and its assessment, this is likely to be a serious addition to the 100-year wealth at Escondida.

Oh, and just for the record, BHP also took the opportunity to confirm that contemplation of the demerger being prepared by the Project River team continues.

“As we announced to the market on 1 April 2014, we continue to actively study the next phase of simplification, including structural options, but we will only pursue options that maximise value for BHP Billiton shareholders," the company said.

Need we note that BHP confirmed its reflection on “structural options" only after The Australian Financial Review reported that Project River was assessing a demerger of a broad and still changing basket of BHP’s non-core assets.